Nearly 50 lakh employees and 55 lakh pensioners will benefit after the Centre on Wednesday hiked Dearness Allowance and Dearness Relief to 4% from 2%, effective from January 1. The Cabinet okayed the release of funds to Central government employees and pensioners to compensate for inflation, it said in a statement.

The new rate is complies with the new formula under the Seventh Pay Commission, the Cabinet said, according to PTI. The move will cost the government Rs 5,857 crore per annum starting from the next financial year, and an additional amount of nearly Rs 1,000 crore for the two extra months of January and February 2017.

However, employees’ unions said the hike was unsatisfactory as the cost of living has gone up significantly in recent years.